This article investigates fiat money as a means for institutional control while exploring the freedom from institutional control established through bitcoin, by seeing both through the lens of extitutional theory — An emerging sociological field pondering the social dynamics of participation and mutual recognition in the assembly of individuals from a bottom-up perspective.
„So you are free?“ she asked. “Yes, I am free” he answered, and nothing seemed more worthless.
– Amerika or The Man Who Disappeared, Franz Kafka, 1911–1914
In Kafka’s Amerika or The Man Who Disappeared, the young protagonist Karl Roßmann is sent to America by his family to work. Throughout the book, Karl experiences numerous intolerable working conditions, until he encounters a job offer at a theater in Oklahoma. Karl scores the job, and Kafka goes on to describe Karl’s long train journey in pursuance of a better future, exploring the vastness of a land of endless opportunity.
Kafka’s man who disappeared seems analogous to the way we live our lives today. Our opportunities seem endless. Around each corner the next best thing may await, if only we are continuously productive enough. We are always on the lookout for a better job, a better salary, or a better life in general. It is a need that cannot be satisfied, as it has become impossible for common individuals to save the money they work to earn. There is no final destination, no number to have in our savings accounts that could let us sit back and say “I’ve made it”, as all the money we have made will at some point in the future be inflated away. We must look for the next big thing, because being satisfied with what we have is simply not an option. In this sense, we are all on our way to Oklahoma — pursuing a goal that is impossible to reach.
When seeing the nation state through the lens of the institution, it becomes clear that fiat money serves as the perfect means to control a population, by issuing constant control over a people’s time and locations.
Fiat Money as a Means for Institutional Control
“It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
-Henry Ford in The American Mercury, 1957
The main premise of every institution is to provide a safe haven from the scary world without, by creating a whole new world within. Occupants are posed with no need to leave its guarding walls, while an institutions success is painted as the total internalization of its guiding principles. Take for example the institution of the nation state, which promises its citizens safety and efficiency, leading to the dilemma of the seemingly pressing need for taxation. If there was no taxation, who would then build our roads? The idea that people would build roads themselves appears completely ludicrous to most individuals, which, of course, it isn’t, as people have always had an inherent want to travel. Yet, a world without taxation, a world organized from the bottom up and incentivized by mutual interest, can hardly be imagined. The mantras of the institution — You need us, because we are the only ones providing safety and efficiency — have herein been internalized; A process which the French philosopher Michel Foucault coined the internalization of authority.
For people to join and remain within an institution, the institution must legitimize itself. To claim a world of safety inside, the notion of unsafety must be claimable outside. Herein institutions establish freedoms-from, which in turn grant us our freedoms-to. For example, the institution of the nation state provides the freedom-from needing to build our roads ourselves, which is arguably a long and tedious process, which in turn grants us the freedom-to participate in today’s modern economy. After all, I could hardly pursue my profession if I’d have to spend my time asphalting streets. An institution therefore must always point towards a problem, which the individual must wish to be freed of. For institutions to persist, it is inevitable to believe that such freedoms-from cannot be established by the individual or autonomous groups alone.
Since its inception, fiat money has been a valuable tool in fueling institutional freedom-from narratives. After all, without a money that is infinitely producible, it is impossible to fight infinite problems, be it drugs, terror or the war on COVID. The mantra of the institution has become our own — There are endless problems, for which we need infinite money — so much so that anything that goes against it is, simply put, unthinkable.
Today, institutional control is broadly applied as the saying goes: We cannot change other people, we can only change ourselves. Modern institutions hardly try to change people’s behavior from without, but by making people change their own actions and beliefs. Such change is ultimately brought forward through the appliance of panoptist surveillance. The panopticon, a prison that allows one single observer to control its entire population, was first concepted by the English philosopher Jeremy Bentham in 1791. In the panopticon, inmates are unable to tell whether they are actively being surveilled or not, wherein the mere possibility of being surveilled causes inmates to discipline themselves. Once internalized, individuals obey the rules of their observer, even when no one is around to see.
Fiat money can be seen as a viable tool to employ panoptist surveillance, as it causes individuals to assign themselves to a certain location over a certain period of time. Location and time are essential metrics to assert institutional control over a population, because without them, it becomes impossible to apply the rule of law. Think about a suspect being interviewed in the case of a crime, who may give an alibi for the time frame in which the crime occurred. The process of giving an alibi will only work if the locations have coordinated their time zones; Otherwise the subject could have very well been in two places at once. When working under a fiat standard, the institution can rest assured that I will spend the majority of my day at work, while fiat’s monetary inflation ensures that I will proceed going to work for the rest of my life, from the day that I am able to, until the day I am too old or brittle.
This so-called civil way of life is maintained throughout our lives not because the institution forces us to work, but because we broadly believe that we can only contribute to society by having stable jobs. If we don’t have a job, we are often left to feel as some sort of second-class citizen of a state, which is nonsense when seen from a sociological point of view. After all, if we think about the virtues we value most in other people, the answer will probably not be the ability to flip 45 Burgers in 15 minutes, or to calculate a stock-to-flow model correctly. Rather, we may conclude that the highest virtues we see in other people, and should consequently see in society, lie more along the lines of honesty, reliability, courage, or kindness. There therefore is an apparent disconnect in what the institution tells us to be valuable, and what individuals value based on their intuition; Yet we discipline ourselves to continue to obey the narratives we have been fed.
Today, this structuring of our days through fiat money — Being at a certain location for a certain period of time — has become so internalized, that a great number of individuals would not know what to do if they didn’t have work. The premise is that if you don’t have a job, you’ll be bored out of your mind until you die a poor, miserable, lonely death. This is also nonsensical, as people have always been fundamentally creative creatures, to whom the thought of boredom equals torture. It is for this reason that taking away an inmate’s right to work is often used as punishment in prisons. People generally enjoy making use of their time, yet anything that goes against the idea of 9 to 5 is quickly deemed impossible by most individuals — Again, we regulate our own beliefs to what we have been told to be adequate, while dismissing our inherent understanding of what it means to be alive; killing ourselves to live (1).
Bitcoin as a Tool for Extitutional Organization
“I identify as a PGP public Key, but you can call me by my Fingerprint.”
- @weedcoder on Twitter
By opting out of fiat money, we strip the institution of its constant control over our time and location, which allows us to retreat into the margins of the dispositif. It is in these fringes of the institution where extitutionality thrives; Where we can undo our understanding of centralist power and authority, and experiment in a different organization of life.(2)
Extitutions are not the opposite of institutions, but rather an integral part of them. Extitutions may exist without the institution, while the institution cannot exist without the extitution, as it would then have nothing to regulate. For example, the insane may exist without the mental institution, while the mental institution cannot exist without the insane; The criminal may exist without the prison, while the prison cannot exist without the criminal; and so on and so forth.
Throughout most of history, extitutional organization — the assembly of individuals based on mutual recognition rather than formal requirement — has stalled because it needed to return to institutional means of value transfer when outgrowing its local borders. The most prominent example for this is the Marxist revolution, which intended to give power to the working class, but could not solve the problem of allocating value without a central point of control; Ultimately ending in a totalitarian superstate. With bitcoin, for the first time in history, we are able to facilitate decentral value transfer globally, which allows us to inhabit enclaves of civil disobedience for longer periods of time.
Bitcoin fosters extitutional organization as it establishes a bond unable to be captured by the modern apparatus. Bitcoin does not care whether you are left, right, brown, black, white or yellow, insane, sane, rich, poor, straight, gay, trans, or any other number of descriptive boxes to be ticked. Instead, Bitcoin removes identity from the equation, and replaces it with pseudonymity.
When we are born, often times even before we are given a name, we are assigned a Social Security Number (SSN), that serves to track our financial reputation within state concepts. In Bitcoin, on the other hand, reputation does not exist; I may be address X, address Y and address Z, or I may only be address X and Z, or I may be none of the addresses listed above. When using the right tools to obscure the coins I hold, it becomes nearly impossible to allocate my transactions to my identity. With this the nation state loses its foremost measure of surveillance over a person’s financial behavior, as the institution is slowly stripped of its control.
Due to its deflationary monetary policy, bitcoin further enables us to take back control over our time. When the money I hold can buy me more tomorrow than it could buy me yesterday, I do not have to continue working once I have acquired enough wealth, and may choose to spend my time by engaging in things like problem solving. And while the same argument could be made for gold, bitcoin is a more efficient means of exchange, as it allows us to transfer value instantly around the world. Because bitcoin does not constrain us to certain locations over certain periods of time by requiring endless work, it enables us to place ourselves without reach of the apparatus’ propositions, and allows us to truly think for ourselves again.
In conclusion it can therefore be argued that Bitcoin could have the potential to fix everything; Because in Bitcoin, the Panopticon goes dark.
(1) Black Sabbath, Kill Yourself to Live (1973) (2) New Critical Legal Thinking: Law and the Political, Routledge (2012)